Red Robin Gourmet Burgers, Inc. Reports Results for the Fiscal First Quarter Ended April 21, 2024
Red Robin Gourmet Burgers (NASDAQ: RRGB) reported its fiscal first-quarter results ending April 21, 2024. Total revenue was $388.5 million, down $29.3 million from the previous year. Comparable restaurant revenue fell by 6.5%. Net loss widened to $9.5 million from $3.3 million last year. Adjusted EBITDA dropped to $12.2 million from $35.9 million.
Despite early second-quarter improvements, the company initiated a $21.2 million debt repayment and launched a new loyalty program on May 22. In a sale-leaseback transaction, Red Robin generated net proceeds of $23.4 million from ten restaurant properties.
Guidance for fiscal 2024 includes total revenue between $1.250 billion and $1.275 billion, with a slight decline in comparable restaurant revenue. Adjusted EBITDA is projected at $60-$70 million.
- Debt repayment of $21.2 million in the first quarter.
- Launch of a new loyalty program on May 22.
- Sale-leaseback transactions generated $23.4 million, aiding debt reduction.
- Positive comparable restaurant revenue growth in the first five weeks of Q2.
- Total revenue decreased by $29.3 million year-over-year.
- Comparable restaurant revenue declined by 6.5%.
- Net loss increased to $9.5 million from $3.3 million.
- Adjusted EBITDA fell significantly to $12.2 million from $35.9 million.
- Reduced restaurant level operating profit margin from 14.7% to 11%.
- Net loss per diluted share worsened to $0.61 from $0.20.
Insights
The financial results for Red Robin Gourmet Burgers, Inc. present a challenging landscape for the company. There's a noteworthy decrease in total revenues by
On a positive note, the company has made strategic moves to improve liquidity, such as the sale-leaseback transaction generating
Short-term, the financial results could deter investor confidence due to negative earnings and decreasing revenues. Long-term, the success of strategic initiatives like the loyalty program and operational adjustments will be crucial. Investors should monitor future quarters to gauge the effectiveness of these measures.
The implementation of a new loyalty program and efforts to improve the guest experience could have significant implications for Red Robin's market positioning. The loyalty program, launched recently, is aimed to enhance customer retention and increase repeat visits, which is critical in the competitive casual dining sector. However, the tangible benefits of this program will take time to materialize and impact revenue streams.
In terms of market dynamics, Red Robin’s ability to differentiate through menu innovation and brand positioning will be essential. The reported positive comparable restaurant revenue in the early weeks of the second quarter offers a glimmer of hope but must be sustained and scaled to have a meaningful financial impact.
Overall, while the introduction of growth initiatives is positive, the mixed financial results and the broader market context suggest cautious optimism. Investors should keep an eye on quarterly updates to assess the ongoing performance and adjustments based on consumer feedback and competitive actions.
Red Robin's strategic actions to manage debt through sale-leaseback transactions and direct repayments are prudently designed to reduce financial burden. The repayment of
Sale-leaseback transactions, while improving short-term liquidity, could increase operational expenses due to lease payments, impacting future profitability. The balance sheet shows a significant amount of outstanding borrowings at
Investors should consider the dual impact of reduced debt and potential future lease obligations. This dynamic will be critical in evaluating the company’s long-term financial health and its ability to support operational and strategic initiatives.
Delivered positive comparable restaurant revenue in the first five weeks of the second quarter
Launched new loyalty program on May 22nd
Repaid approximately
Highlights for the First Quarter of Fiscal 2024, Compared to the First Quarter of Fiscal 2023:
- Total revenues are
$388.5 million $29.3 million - Comparable restaurant revenue(1) decreased
6.5% . - Net loss is
$9.5 million $3.3 million - Adjusted EBITDA(2) is
$12.2 million $35.9 million - Completed a sale-leaseback transaction for ten restaurants, generating net proceeds of approximately
$23.4 million $7.4 million - Repaid
$21.2 million $45.1 million
(1) Comparable restaurant revenue represents revenue from Company-owned restaurants that have operated 18 months as of the beginning of the period presented. For the first quarter of fiscal 2024 there were 406 comparable restaurants, out of the total 413 Company-owned restaurants. |
(2) See "Reconciliation of Non-GAAP Results to GAAP Results" below for more details. |
G.J. Hart, Red Robin's President and Chief Executive Officer said, "Almost 18 months ago, we launched our North Star Five-Point plan grounded in a commitment to a great guest experience through investments in service and food quality. We expect the investment to deliver gains in sales and profits, and drive long-term shareholder value. Due to the hard work and dedication of our team members, we are beginning to reap the rewards of the investments by delivering positive comparable restaurant revenue in the first five weeks of the second quarter."
Hart continued, "Our menu and our brand are centered around providing everyday value to each and every guest through our over 30 bottomless sides, our Tavern Burger lineup, our pizza offerings and throughout our menu. We believe this brand positioning has been beneficial to our top-line trends as we continue to create moments of connection over craveable food that only Red Robin can provide."
Hart concluded, "The launch of our new Red Robin loyalty program last week represents the successful execution of another growth lever we can utilize going forward to return this beloved brand to prominence in the casual dining industry. We are excited by the progress we've seen so far, and I am confident we are only scratching the surface of our potential."
First Quarter 2024 Financial Summary
The following table presents financial results for the first fiscal quarter of 2024, compared to results from the same period in 2023 ($ in millions except per share data):
Quarter Ended | |||||
April 21, 2024 | April 16, 2023 | ||||
Total revenues | $ 388.5 | $ 417.8 | |||
Restaurant revenues | 378.6 | 406.9 | |||
Net loss | (9.5) | (3.3) | |||
Income (loss) from operations | (2.1) | 4.2 | |||
Income (loss) from operations as a percent of total revenues | (0.5) % | 1.0 % | |||
Restaurant Level Operating Profit(1) | $ 41.5 | $ 60.0 | |||
Restaurant Level Operating Profit Margin(1) | 11.0 % | 14.7 % | |||
Adjusted EBITDA (1) | $ 12.2 | $ 35.9 | |||
Net loss per diluted share | $ (0.61) | $ (0.20) | |||
Adjusted income (loss) per diluted share(1) | $ (0.80) | $ 0.25 | |||
(1) See "Reconciliation of Non-GAAP Results to GAAP Results" below for more details. |
Balance Sheet and Liquidity
During the first quarter of fiscal 2024, the Company repaid
Sale-Leaseback Activity
During the first quarter of fiscal 2024, the Company completed a third sale-leaseback transaction with Essential Properties Realty Trust, Inc. (NYSE:EPRT) to sell and simultaneously lease-back ten owned properties. The transaction generated gross proceeds of approximately
Outlook for Fiscal 2024 and Guidance Policy
Comparable restaurant revenue in the first five weeks of the second quarter of fiscal 2024 increased
The Company provides guidance of select information related to the Company's financial and operating performance, and such measures may differ from year to year. The projections are as of this date and the Company assumes no obligation to update or supplement this information.
The Company reiterates all aspects of its Fiscal 2024 guidance;
- Total revenue of
$1.25 0 billion$1.27 5 billion - Restaurant level operating profit of
12.5% to13.5% , inclusive of investments in the Guest experience and rent expenses related to the sale leaseback transactions; - Adjusted EBITDA of
$60 million $70 million - Capital expenditures of
$25 million $35 million
Fiscal 2024 includes 52 weeks versus 53 weeks in fiscal 2023.
Providing Income (loss) from operations and Net income (loss) guidance is potentially misleading and not practical given the difficulty of projecting event-driven transactional and other non-core operating items. As such, we do not present a reconciliation of forecasted non-GAAP measures to the corresponding GAAP measures.
(1) Comparable restaurant revenue for the first five weeks of the second quarter of fiscal 2024 is calculated based on the Company's point-of-sales sale data, which does not include adjustments for loyalty breakage. |
Investor Conference Call and Webcast
Red Robin will host an investor conference call to discuss financial results for its first quarter of fiscal 2024 and outlook for fiscal 2024 today at 4:30 p.m. ET. The conference call can be accessed live over the phone by dialing 201-689-8560 which will be answered by an operator or by clicking Call Me™. The conference call should be accessed at least 10 minutes prior to its scheduled start.
A replay will be available from approximately two hours after the end of the conference call and can be accessed by dialing 412-317-6671; the conference ID is 13745560. The replay will be available through Wednesday, June 5, 2024.
The call will be webcast live and later archived from the Company's Investor Relations website.
Red Robin Gourmet Burgers, Inc. (NASDAQ: RRGB)
Red Robin Gourmet Burgers, Inc. (www.redrobin.com), is a casual dining restaurant chain founded in 1969 that operates through its wholly-owned subsidiary, Red Robin International, Inc., and under the trade name, Red Robin Gourmet Burgers and Brews. We believe nothing brings people together like burgers and fun around our table, and no one makes moments of connection over craveable food more memorable than Red Robin. We serve a variety of burgers and mainstream favorites to Guests of all ages in a casual, playful atmosphere. In addition to our many burger offerings, Red Robin serves a wide array of salads, appetizers, entrees, desserts, signature beverages and Donatos® pizza at select locations. It's now easy to enjoy Red Robin anywhere with online ordering available for to-go, delivery and catering, or you can download our new app for easy customization, access to the Red Robin Royalty® dashboard and more. There are more than 500 Red Robin restaurants across
Forward-Looking Statements
Forward-looking statements in this press release regarding the Company's future performance; the implementation of the Company's "North Star" plan and the anticipated impacts thereof; our new marketing strategy and brand positioning; the launch of our new loyalty program and anticipated impacts thereof; operations improvement efforts; cost savings; our ability to drive traffic and bring Guests into the restaurant; efforts to grow sales; our ability to build upon investments and transformational changes, including product and menu enhancements and changes to the staffing model and compensation programs; anticipated uses of capital and planned investments; future sale-leaseback transactions; and statements under the heading "Outlook for Fiscal 2024 and Guidance Policy," including with respect to total revenue, comparable restaurant revenue, restaurant level operating profit, selling, general and administrative costs, capital expenditures and Adjusted EBITDA; and all other statements that are not historical facts are made under the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These statements are based on assumptions believed by the Company to be reasonable and speak only as of the date on which such statements are made. Without limiting the generality of the foregoing, words such as "expect," "believe," "anticipate," "intend," "plan," "project," "could," "should," "will," "outlook" or "estimate," or the negative or other variations thereof or comparable terminology are intended to identify forward-looking statements. Except as required by law, the Company undertakes no obligation to update such statements to reflect events or circumstances arising after such date and cautions investors not to place undue reliance on any such forward-looking statements. Forward-looking statements are subject to various risks and uncertainties that could cause actual results to differ materially from those described in the statements, including but not limited to the following: the risk that our financial performance including comparable restaurant revenue for the remainder of Q2 2024 will not be consistent with the first five weeks of the quarter; the effectiveness of the Company's strategic initiatives, including our "North Star" plan, labor and service models, and operational improvement initiatives and our ability to execute on such strategic initiatives; the global and domestic economic and geopolitical environment; our ability to effectively compete in the industry and attract and retain Guests; the adequacy of cash flows and the cost and availability of capital or credit facility borrowings; a privacy or security breach or a failure of our information technology systems; the effectiveness and timing of the Company's marketing and branding strategies, including the loyalty program and social media platforms; changes in consumer preferences; leasing space including the location of such leases in areas of declining traffic; changes in cost and availability of commodities; interruptions in the delivery of food and other products from third parties; pricing increases and labor costs; changes in consumer behavior or preference; expanding our restaurant base; maintaining and improving our existing restaurants; the transition and retention of our key personnel; our ability to recruit, staff, train, and retain our workforce; operating conditions, including adverse weather conditions, natural disasters, pandemics and other events affecting the regions where our restaurants are operated; actions taken by our franchisees that could harm our business or reputation; negative publicity regarding food safety or health concerns; protection of our intellectual property rights; changes in federal, state, or local laws and regulations affecting the operation of our restaurants; and an increase in litigation or legal claims by team members, franchisees, customers, vendors, stockholders and others. These factors should not be construed as exhaustive and should be read in conjunction with other cautionary statements and risk factors described from time to time in the Company's Form 10-K, Form 10-Q, and Form 8-K reports (including all amendments to those reports) filed with the
Comparable Restaurant Revenue
The following table presents the percentage change in comparable restaurant revenue in the first quarter, and year to date period of fiscal 2024:
Increase (Decrease) Versus | |||
Quarter Ended | |||
April 21, 2024 | April 16, 2023 | ||
Guest Traffic | (9.4) % | 0.6 % | |
Average Guest Check | |||
Menu Price Increase | 5.4 % | 7.2 % | |
Menu Mix | (1.8) % | 0.8 % | |
Discounts | (0.7) % | — % | |
Total Guest Check | 2.9 % | 8.0 % | |
Total Change in Comparable Restaurant Revenue | (6.5) % | 8.6 % | |
RED ROBIN GOURMET BURGERS, INC. CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (In thousands, except per share data) (Unaudited) | ||||
Quarter Ended | ||||
April 21, 2024 | April 16, 2023 | |||
Revenues: | ||||
Restaurant revenue | $ 378,568 | $ 406,893 | ||
Franchise revenue | 5,341 | 5,283 | ||
Other revenue | $ 4,632 | $ 5,636 | ||
Total revenues | 388,541 | 417,812 | ||
Costs and expenses: | ||||
Restaurant operating costs (excluding depreciation and amortization shown separately below): | ||||
Cost of sales | 90,209 | 99,670 | ||
Labor | 148,958 | 145,421 | ||
Other operating | 66,490 | 72,050 | ||
Occupancy | 31,428 | 29,801 | ||
Depreciation and amortization | 18,154 | 21,825 | ||
General and administrative | 25,842 | 26,147 | ||
Selling | 13,547 | 8,376 | ||
Pre-opening costs | — | 582 | ||
Other charges (gains), net | (3,976) | 9,759 | ||
Total costs and expenses | 390,652 | 413,631 | ||
Income (loss) from operations | (2,111) | 4,181 | ||
Other expense: | ||||
Interest expense | 7,480 | 7,770 | ||
Interest (income) and other, net | (312) | (353) | ||
Loss before income taxes | (9,279) | (3,236) | ||
Income tax provision | 181 | 20 | ||
Net loss | $ (9,460) | $ (3,256) | ||
Loss per share: | ||||
Basic | $ (0.61) | $ (0.20) | ||
Diluted | $ (0.61) | $ (0.20) | ||
Weighted average shares outstanding: | ||||
Basic | 15,554 | 15,996 | ||
Diluted | 15,554 | 15,996 | ||
RED ROBIN GOURMET BURGERS, INC. CONDENSED CONSOLIDATED BALANCE SHEETS (In thousands, except share amounts) | ||||
(Unaudited) | ||||
April 21, 2024 | December 31, 2023 | |||
Assets: | ||||
Current assets: | ||||
Cash and cash equivalents | $ 30,594 | $ 23,634 | ||
Accounts receivable, net | 13,949 | 21,592 | ||
Inventories | 27,144 | 26,839 | ||
Prepaid expenses and other current assets | 13,623 | 11,785 | ||
Restricted cash | 7,958 | 7,931 | ||
Total current assets | 93,268 | 91,781 | ||
Property and equipment, net | 233,525 | 261,258 | ||
Operating lease assets, net | 361,934 | 361,609 | ||
Intangible assets, net | 15,584 | 15,491 | ||
Other assets, net | 12,775 | 11,795 | ||
Total assets | $ 717,086 | $ 741,934 | ||
Liabilities and stockholders' equity (deficit): | ||||
Current liabilities: | ||||
Accounts payable | $ 31,347 | $ 27,726 | ||
Accrued payroll and payroll-related liabilities | 37,754 | 32,524 | ||
Unearned revenue | 24,673 | 36,067 | ||
Current portion of operating lease obligations | 51,862 | 43,819 | ||
Accrued liabilities and other | 52,007 | 46,201 | ||
Total current liabilities | 197,643 | 186,337 | ||
Long-term debt | 161,961 | 182,594 | ||
Long-term portion of operating lease obligations | 376,660 | 383,439 | ||
Other non-current liabilities | 9,923 | 10,006 | ||
Total liabilities | 746,187 | 762,376 | ||
Stockholders' equity (deficit): | ||||
Common stock; 15,528 shares outstanding as of April 21, 2024 and December 31, 2023 | 20 | 20 | ||
Preferred stock, of April 21, 2024 and December 31, 2023 | — | — | ||
Treasury stock 4,837 and 4,921 shares, at cost, as of April 21, 2024 and December 31, 2023 | (171,691) | (174,702) | ||
Paid-in capital | 227,488 | 229,680 | ||
Accumulated other comprehensive loss, net of tax | (40) | (22) | ||
Accumulated deficit | (84,878) | (75,418) | ||
Total stockholders' equity (deficit) | (29,101) | (20,442) | ||
Total liabilities and stockholders' equity (deficit) | $ 717,086 | $ 741,934 | ||
Reconciliation of Non-GAAP Results to GAAP Results
In addition to the results provided in accordance with Generally Accepted Accounting Principles ("GAAP") throughout this press release, the Company has provided Adjusted EBITDA, Adjusted net income (loss) and Adjusted net income (loss) per share - diluted, which are non-GAAP measurements. We define EBITDA as net income (loss) before interest expense, income taxes, and depreciation and amortization. Adjusted EBITDA, Adjusted net income (loss) and Adjusted net income (loss) per share-diluted are supplemental measures of our performance that are not required by or presented in accordance with GAAP. We believe these non-GAAP measures give the reader additional insight into the ongoing operational results of the Company, and are intended to supplement the presentation of the Company's financial results in accordance with GAAP. Adjusted EBITDA, Adjusted net income (loss) and Adjusted net income (loss) per share-diluted exclude the impact of non-operating or nonrecurring items including changes in estimate, asset impairments, litigation contingencies, gains (losses) on debt extinguishment, restaurant and office closure costs, gains on sale leaseback transactions, severance and executive transition costs and other non-recurring, non-cash or discrete items; net of income tax impacts. Other companies may define these non-GAAP measures differently, and as a result may not be directly comparable to those of other companies. Management believes this supplemental information will assist with comparisons of past and future financial results against the present financial results presented herein.
The Company believes restaurant level operating profit is an important measure for management and investors because it is widely regarded in the restaurant industry as a useful metric by which to evaluate restaurant level operating efficiency and performance. The Company defines restaurant level operating profit to be income from operations less franchise revenue and other revenue, plus other charges (gains), net, pre-opening costs, selling costs, general and administrative expenses, and depreciation and amortization. The measure includes restaurant level occupancy costs that include fixed rents, percentage rents, common area maintenance charges, real estate and personal property taxes, general liability insurance, and other property costs, but excludes depreciation and amortization expense, substantially all of which is related to restaurant level assets, because such expenses represent historical sunk costs which do not reflect current cash outlay for the restaurants. The measure also excludes costs associated with selling, general, and administrative functions, pre-opening costs, as well as, other charges (gains), net because these costs are non-operating or nonrecurring and therefore not related to the ongoing operations of its restaurants. Restaurant level operating profit is not a measurement determined in accordance with GAAP and should not be considered in isolation, or as an alternative, to income (loss) from operations as an indicator of financial performance. Restaurant level operating profit as presented may not be comparable to other similarly titled measures of other companies in the Company's industry.
Reconciliation of Net Income (Loss) to Non-GAAP Adjusted Net Income (Loss) and Adjusted Income (Loss) per Share - Diluted (In thousands, except per share data, unaudited) | ||||
Quarter Ended | ||||
April 21, 2024 | April 16, 2023 | |||
Net loss as reported | $ (9,460) | $ (3,256) | ||
Other Charges (gains), net: | ||||
Gain on sale leaseback, net | (7,425) | — | ||
Litigation contingencies | 420 | 4,300 | ||
Restaurant closure costs, net | 175 | 1,750 | ||
Severance and executive transition | 945 | 1,891 | ||
Asset impairment | — | 694 | ||
Asset disposal and other, net | 1,794 | 1,062 | ||
Closed corporate office costs, net of sublease income | 115 | 62 | ||
Income tax effect | 1,034 | (2,537) | ||
Adjusted net income (loss) | $ (12,402) | $ 3,966 | ||
Loss per share - diluted: | ||||
Net loss as reported | $ (0.61) | $ (0.20) | ||
Other charges (gains), net: | ||||
Gain on sale leaseback, net | (0.48) | — | ||
Litigation contingencies | 0.03 | 0.26 | ||
Restaurant closure costs, net | 0.01 | 0.11 | ||
Severance and executive transition | 0.06 | 0.12 | ||
Asset impairment | — | 0.04 | ||
Asset disposals and other | 0.12 | 0.06 | ||
Closed corporate office costs, net of sublease income | 0.01 | — | ||
Income tax effect | 0.07 | (0.16) | ||
Adjusted income (loss) per share - diluted | (0.80) | 0.25 | ||
Weighted average shares outstanding: | ||||
Basic | 15,554 | 15,996 | ||
Diluted | 15,554 | 15,996 | ||
Reconciliation of Income (Loss) from Operations to Non-GAAP Restaurant-Level Operating Profit (In thousands, unaudited) | ||||||||
Quarter Ended | ||||||||
April 21, 2024 | April 16, 2023 | |||||||
Income (loss) from operations | $ (2,111) | (0.5) % | $ 4,181 | 1.0 % | ||||
Less: | ||||||||
Franchise revenue | 5,341 | 1.4 % | 5,283 | 1.3 % | ||||
Other revenue | 4,632 | 1.2 % | 5,636 | 1.3 % | ||||
Add: | ||||||||
Other charges (gains), net | (3,976) | (1.0) | 9,759 | 2.3 | ||||
Pre-opening costs | — | — | 582 | 0.1 | ||||
Selling | 13,547 | 3.5 | 8,376 | 2.0 | ||||
General and administrative expenses | 25,842 | 6.7 | 26,147 | 6.3 | ||||
Depreciation and amortization | 18,154 | 4.7 | 21,825 | 5.2 | ||||
Restaurant-level operating profit | $ 41,483 | 11.0 % | $ 59,951 | 14.7 % | ||||
Income (loss) from operations as a percentage of total revenues | (0.5) % | 1.0 % | ||||||
Restaurant-level operating profit margin (as a percentage of restaurant revenue) | 11.0 % | 14.7 % | ||||||
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA (In thousands, unaudited) | |||
Quarter Ended | |||
April 21, 2024 | April 16, 2023 | ||
Net loss as reported | $ (9,460) | $ (3,256) | |
Interest expense, net | 7,313 | 7,576 | |
Income tax provision | 181 | 20 | |
Depreciation and amortization | 18,154 | 21,825 | |
EBITDA | 16,188 | 26,165 | |
Other charges (gains), net: | |||
Gain on sale leaseback, net | (7,425) | — | |
Litigation contingencies | 420 | 4,300 | |
Restaurant closure costs, net | 175 | 1,750 | |
Severance and executive transition | 945 | 1,891 | |
Asset impairment | — | 694 | |
Asset disposals and other | 1,794 | 1,062 | |
Closed corporate office costs, net of sublease income | 115 | 62 | |
Adjusted EBITDA | $ 12,212 | $ 35,924 | |
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SOURCE Red Robin Gourmet Burgers, Inc.
FAQ
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